I’ve been a do-it-yourselfer my entire investing career, adhering to Vanguard’s simple and smart Principles for Investing Success—setting clear goals (retirement, college for the kids, etc.) and assembling a balanced portfolio of index and active funds in line with my risk tolerance and time horizon. Naturally, I hold Vanguard funds and ETFs, so my investments are low-cost.
And I stayed the course, as Vanguard founder Jack Bogle frequently exhorted, through the crash of 1987, the bursting of the tech bubble in 2000, and the 2008 global financial crisis, among other market calamities. But after more than 30 years as a DIYer, I’m considering enlisting the help of a financial professional. Why? A few reasons:
- To get a gut check. At age 56, I’m the quintessential “pre-retiree.” While I plan to continue working and have plenty left in the tank, I’ll eventually leave the workforce in the coming years. Then I’ll transition from accumulating retirement assets to drawing down my portfolio to meet living expenses, pay medical insurance premiums, take trips—”retirement stuff,” if you will. I’m in good shape financially, but consulting with a financial advisor might give me that gut check, offering me a level of confidence and comfort that my family is prepared for the next 30–40 years while suggesting any necessary course corrections along the way.
- To manage complexity. The accumulation stage is relatively easy, especially since I work for an asset management firm. I joined Vanguard’s 401(k) plan on my first day in 1986, socked away a good portion of my paycheck, invested prudently, and lived below my means. Now, as I look forward, the de-accumulation stage looks more daunting. Which accounts do I tap first—IRA, taxable, 401(k)? When should I take Social Security? Is an annuity a good idea? How do I best pay for health care? A financial advisor could develop an optimal plan to manage these complexities. Could I do it on my own? Probably. I’d likely have the time, but I have doubts about my ability and willingness. It’s like doing my taxes; I could prepare my own returns, but I choose to outsource this task to a CPA. Over the years, my accountant likely got me larger refunds or minimized my payments to Uncle Sam, and in the process, saved me time and headaches.
- To protect my spouse. In the Woerth household, my wife is a superb chief operating officer; I serve as chief financial officer. What if I get hit by the proverbial bus or, in time, start to lose the cognitive ability to make sound financial decisions? If I had an advisor, I’d have peace of mind knowing I’d hired a qualified, trusted financial professional to manage my portfolio in case something ever happened to me. This is important to me and to many other investors, according to Vanguard research of 500 Vanguard Personal Advisor Services clients. Our study found that investors assign 45% of the total value of their relationship with an advisor to the emotional outcomes, while functional, or more traditional, aspects of the relationship—such as portfolio management and financial planning—make up the other 55% of the perceived total value.
If you find yourself in a similar stage in life, I hope this peek inside my thinking about financial advice was helpful. In a future blog post, I’ll help you assess the value of advice services and help you make the right choices for your situation.
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Advice services are provided by Vanguard Advisers, Inc., a registered investment advisor, or by Vanguard National Trust Company, a federally chartered, limited-purpose trust company.
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Vanguard ETF Shares are not redeemable with the issuing Fund other than in very large aggregations worth millions of dollars. Instead, investors must buy and sell Vanguard ETF Shares in the secondary market and hold those shares in a brokerage account. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling.